Cash and Trade Convergence: The Demand for Talent

2010 was a notable year – not simply in terms of a global financial crisis recovery, but also as an eye-opener. After all the analysts have made their projections and assertions over the ‘developed versus developing economies’ arguments, and despite the talk about how Asian businesses for some of the largest global players remain a mere fragment of their total size – the same global players candidly admit in quick succession that Asia has become their largest focus and the market where serious expansion is being undertaken.

Transaction Banking Developments in Asia

In the transaction banking universe, this theme is as evident as in other businesses, if not more accentuated due to its nature. Last year saw not only the bigger and more established transaction banking businesses hiring aggressively, but also a few key banks seriously reinvesting in the business, which took the market by storm. The style of hiring really big names to head up transaction banking businesses made great news in the media, but it also raised expectations of the hiring banks in the markets. It is still too early to tell, but from that perspective 2011 and 2012 are years to look forward to from a pure business delivery and expansion perspective – big wins and major deals, not just courtesy of bigger players such as Citi, Standard Chartered Bank and HSBC: but also in the revamped, reinvested or restructured businesses of JP Morgan, Bank of America, Deutsche Bank, BNP Paribas, DBS and ANZ. To facilitate this expansion, most of these banks have hired some very good talent, both at the top and at middle-management levels, while also supplementing it by retaining some of their key human resources. Obviously, the job is not yet done and there are some easily identifiable gaps.

In the ‘changed world’ scenario, Asia seems to have been instrumental in changing hitherto-conventional trade flows. Trade has also been largely instrumental in generating a recovery from the economic crisis but with a marked difference – these are mostly intra-regional, within Asia and with markets such as Africa, but veering away from Europe and the US. While these transactions might have been operating on smaller margins than in the past, it still stands to reason that the volumes are here. Hence the increased focus on trade amid all transaction banking businesses and the rise in demand for experienced trade professionals. While the integration of cash and trade teams from a sales perspective was diligently implemented by the larger banks a couple of years earlier; the time to really capitalise on that structure came in 2010 and seems here to stay.

But we all know that with or without integrated sales teams, the talent pool for trade professionals in Asia is finite and exponentially smaller than the larger and more developed cash talent pool. In my interactions with banks and candidates alike in the market, most people have confessed that while the teams are definitely integrated, there is still a clear understanding, if not distinction, of who runs more with cash and who with trade. Obviously cash has an older business focus in its stable low-risk, low-margin fashion, helped by the fact that most regional treasuries are based out of Singapore. The demand for people who could confidently face-off with corporate treasurers was sustained and helped to groom a continuous pool of cash professionals in the region. Sheer size also helped – as in the business; so in the number of people doing it within a bank. Trade, on the other hand, was of a lesser volume and mostly unilateral in the past, keeping its niche in the talent pool as well. With the increased complexities of trade transactions and its larger volumes, demand for trade professionals is obviously on the rise and if honestly admitted, also a source of concern at its lack as well. The industry now tends to admit that it is easier to teach a trade professional cash, rather than vice versa. If it was the other way round, then a majority of hiring problems centred on trade would seem to have a ready-made solution.

Look West?

When you think about it, the solution is right in front of our faces. The western world has a good talent pool of trade professionals, they have gained their experience through large and widespread trade flows in the past, and are more than keen to get a piece of the action in Asia. Ask any recruiter and they will tell you about the increased volumes of applications and speculative approaches they get from people across the globe wanting to come to Asia. However, it is not that simple.

Considering that the major trade flows are intra-regional in Asia, the whole Asian context becomes very important while selecting individuals to facilitate and manage them. Client sensibilities as well as expectations have changed and so have the ways to manage their growing and enlarging businesses as well. The realities of doing business are very much grounded in Asia – their varied nuances and cultural outreach in themselves can prove overwhelming for a complete outsider. While certainly not insurmountable, they could prove pretty challenging to someone not used to it. And given the pace of businesses as well as the constant volumes that need to be catered for, banks really do not have the luxury of time to give to someone so that they might gradually adapt. It is easier for them to recruit someone internally from their other offices than to hire non-Asian talent here. Most banks have gone the internal transfer route pretty successfully last year. From a sheer talent transferability angle, however, Australia seems to continue to be able to provide that source of talent. As part of the Asia-Pacific, people who have experience in the market there continue to be able to attract interest as well as good premiums for roles based in Singapore and Hong Kong.

As business performance stabilises, another issue that transaction banking will soon face is the replenishment of its talent pool. It has somehow come about that fresh entrants in this part of the business are by far rarer than their other corporate banking and investment banking counterparts, maybe because, until very recently, it was considered less exciting or very product-knowledge centric. Hopefully that is now a perception of the past, and given the focus that the business is demanding from top management in banks, professionals without a cash or trade background are starting to get drawn to it. It is up to the banks themselves to become more welcoming to the idea of opening their transaction banking doors to young talent from other parts of the business. Indeed, some banks have started to do so more aggressively or to look at other avenues to keep the talent pool refreshed and sustained.

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